CORPORATE COUNSEL

CORPORATE COUNSEL
Starting a business can be an amazing experience. This is a journey that you are embarking to be self sufficient and successful. Starting a business can be daunting because there are so many decisions to be made in order to get the business off the ground. The internet is a wealth of knowledge but sometimes it can be overwhelming to know all this information and not know how to make the pieces fit. We enjoy helping our clients materialize their dreams of business ownership. It is our mission to get you and your business started on the right foot.
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Are all business entities the same?
Incorporating a business in Florida will provide you with many advantages. 
The costs of doing business are low from a governmental and regulatory viewpoint. A business corporation is required to be registered in the State of Florida to “do business.” This means a corporation from another state or country must be registered to carry-on a true business relationship in Florida. Doing business means more than simply visiting to take orders; it means any business that rents an office or employs Florida workers in the State must be registered.

There are several types of business corporations available to the public including:

• Corporation: either a U.S. subsidiary or a U.S. branch of a non-U.S. corporation, S and C Corporations
• Limited Liability Company (LLC)
• Partnership: general, limited or limited liability partnership
• Sole Proprietorships 
• Benefit Corporations (B Corporation)
• Professional Service Corporations
• Joint Ventures


What are the most common forms of business entities?
The most common business entities are Corporations (aka Inc.) and Limited Liability Companies (aka LLC.). Here are some of the differences:
Florida LLC: An Overview
A Florida LLC is formed by filing Articles of Organization with the Department of State.

Pros
Privacy: you can form an anonymous Florida LLC, but you cannot form an anonymous Florida corporation.
Less formal: LLCs have far fewer administrative requirements (no board of directors, corporate officers, annual shareholder meetings, etc.).
Pass-through taxation: profits are reported on your individual tax return, which means you don’t end up getting taxed twice.

Cons
Self-employment tax: unless you opt to be treated as an S-corp, you’ll have to pay taxes on all profits, which are generally higher than the corporate tax rate.

Limited-life: unless specifically addressed in your Operating Agreement, the departure of an LLC member will dissolve your company.
Florida Corporation: An Overview
To incorporate in Florida, you file Articles of Incorporation with the Department of State.

Pros
Re-investment: the corporate tax structure allows you to invest profit back into the company, a function that used strategically can lower your tax burden.
Legal precedent: there is far more law regarding corporations than LLCs, which makes it far easier to understand exactly what your business can (and can’t) legally do.
Benefits: corporations can offer an array of benefits in order to retain talented employees, including stock options, and these benefits are tax deductible.

Cons
Double-taxation: corporations pay an entity tax, and shareholders are taxed on the dividends they receive.
Formal requirements: corporations are intricately structured and face an array of reporting and record keeping requirements that can be cumbersome and costly.

Do I need an EIN (Employ Identification Number)?
Yes for most business entities. You will need an EIN. The law views your new business entity as a “legal person”. A person whom can sue and be sued and who has many other rights and obligations bestowed on it. Like all “persons” you get a social security number to be able to distinguish you from the any other person. The EIN is no different than this it is what separates your legal entity from any other distinct business entity. There is one number and that number will be used for many purposes but more specifically for IRS purposes.


What is an S-Corporation?
LLC vs Corporation is not the only consideration. If you are looking to compare Florida business entities to discover which Florida entity is right for you, you may have heard about the S-Corp.

An S-Corp is not actually a different business structure like an LLC or a Corporation. It is a tax designation. An LLC can be as an S-Corp by the IRS, and so can a Corporation. In either case, the company must submit paperwork to the IRS requesting the tax designation.
An S-Corp has a slightly different tax structure: as a shareholder of an S-Corp, you can draw a salary from the company and collect dividends. Self-employment tax is paid on the salary, but the dividends are taxed at the lower, standard income tax rate (self-employment taxes are higher because you are paying for Social Security and Medicare both as the employee and the employer). This can save you considerable money if managed properly.

What is a B Corporation?
Becoming a benefit corporation gives entrepreneurs and investors an additional choice when determining which corporate form is most suitable to achieve their objectives.  

Directors and officers of a B corporation are mandated to consider the effects of any corporate action or inaction upon:
  • the corporation’s ability to accomplish its general public benefit purpose and any specifically adopted benefit purposes
  • shareholders
  •  employees
  •  suppliers
  • customers
  • communities where the business is located
  • the local and global environment 
  • the short- and long-term interests of the corporation.

Benefit Corporations: 

  • have an expanded purpose to explicitly include general and specific public benefit
  • are required to consider the impact of their decisions not only on shareholders but also on their stakeholders
  •  are required to make available to the public an annual benefit report that assesses their overall social and environmental performance against a third party standard. Such report does not need to certified or audited by a third party, but use the standard as an assessment tool.


Why Do I Need Legal Counsel?
There are so many do-it-yourself kits and guides for how to start your own business entity that a lot of small business owners assume that they don’t need a lawyer to help them navigate through this process. Unfortunately, this is one of the times that doing it yourself can end up costing your more in the long run. 

Why would it cost me more ? 
Incorporation documents or any business entities for that fact have documents that are complied through the foundational process.  
If you start a business these documents will dictate how you will run your business. If these documents are done incorrectly, you could lose all that you have worked so hard to put together. As the parable says if you build your house on the rock it will not fall during the storm. But if you build your house on the sand it will easily be swept away. 


Having a strong business foundation will help you navigate through any storm and promotes successes. 


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